Introductory Econometrics: A Modern Approach 6th Edition by Jeffrey M Wooldridge

Exercise 13

Use the data in ATTEND.RAW for thiexercise.

(i) In the model of Example 6.3, argue that ?stndfnl/?priGPA?????2 + 2????4priGPA + ????6atndrte. Use equation (6.19) to estimate the partial effect when priGPA = 2.59 and atndrte = 82. Interpret your estimate.

(ii) Show that the equation can be written as stndfnl = ????0 + ????1atndrte + ????2priGPA + ???? 3ACT + ????4(priGPA - 2.59)2 + ????5 ACT2 + ????6 priGPA(atndrte - 82) + u,

where ????2 = ????2 + 2????4(2.59) + ????6(82). (Note that the intercept has changed, but this is unimportant.) Use this to obtain the standard error of from part (i).

(iii) Suppose that, in place of priGPA(atndrte - 82), you put (priGPA - 2.59)-(atndrte - 82). Now how do you interpret the coefficients on atndrte and priGPA?

Step 1 of 3

(i)

Hold all variables except priGPA fixed and use the usual approximation, to get:

Dividing by ?priGPA as follows:

In equation (6.19) . When priGPA= 2.59 and atndrte= 82, thus the partial estimate is calculated as follows:

The coefficient obtained is showing a positive relation.